The two ASX shares I'm going to highlight are among the most highly-rated businesses in Australia and they both may be capable of producing very pleasing shareholder returns.

Of course, these are just analysts' predictions, not guarantees of how things will play out.

Zip Co Ltd (ASX: ZIP)

Zip is one of the largest buy now, pay later businesses in Australia and the US.

According to CMC Invest, there have been six recent ratings on the business, with all of those being a buy.

The business could deliver significant capital growth according to the price targets. A price target is where analysts think the share price could be in a year from the time of the investment call.

According to CMC Invest, the average price target on Zip is $3.84, suggesting a potential rise of around 130% over the next year. The most optimistic price target is $4.50, suggesting a possible rise of approximately 170%, while the lowest price target is $2.60, implying a rise of more than 50%.

Of course, it's not common for a particular business to rise more than 50% in a year, so a rise of over 100% would be very impressive.

The ASX share's FY26 first-half result was impressive. Total income grew 29.2% to $664 million, operating profit (cash EBITDA) jumped 85.6% to $124.3 million and active customers rose 4.1% to 6.6 million.

However, net bad debts increased to 1.7% of total transaction value (TTV), up from 1.6% of TTV in the first half of FY25.

Most importantly, the business is expecting ongoing strength growth in the US. In FY26, the company expects to report US TTV growth of more than 40% in USD dollar terms, balancing profitability and credit loss performance. The US TTV in January 2026 grew by more than 40% year-over-year.

According to CMC Invest, the business is valued at around 20x FY26's estimated earnings.

Baby Bunting Group Ltd (ASX: BBN)

Another ASX share that's currently liked by analysts is Baby Bunting, a retailer of various baby and toddler items like prams, beds, clothing, toys and so on.

According to CMC Invest, in the last three months, there have been four buy ratings on the business and two holds.

The average price target of those ratings is $3.18, suggesting a possible rise of more than 130% for the ASX share.

The most optimistic price target is $4.20, suggesting a potential increase of around 210%, while the lowest estimate is $2.60, which implies a possible rise of more than 90%.

In the FY26 half-year result, the business was able to report a number of positives.

Total sales increased by 6.7% year-over-year to $271.4 million, with comparable store sales growth of 4.7%. Excitingly, its 'store of the future' refurbishment program unlocked a 25% sales increase, which was the top end of its guidance range of between 15% to 25%.

Pleasingly, the company said that second half sales momentum continued in the first seven weeks with comparable sales growth of 6.7%.

The projection on CMC Invest suggests the business could generate earnings per share (EPS) of 12.8 cents in FY26, putting the current valuation at under 11x FY26's estimated earnings.

The post 2 ASX shares highly recommended to buy: Experts appeared first on The Motley Fool Australia.

On Tuesday, both companies reported earnings from 1H FY26. 

However it hasn't been smooth sailing as both Baby Bunting and Seek shares fell yesterday. 

Following results, the team at Morgans released updated guidance. 

It seems the broker sees one as a clear buy. 

Let's see what it had to say. 

Baby Bunting shares get slight decrease

For H1 FY26, Baby Bunting reported: 

• Total sales of $271.4 million, up 6.7% on the prior corresponding period
• Gross profit increased 10% to $111.4 million
• Net profit after tax (NPAT) came in at $5 million, up 4.1% on last year and in line with guidance.

Investors reacted positively to this news, with Baby Bunting shares up 10% since Monday.

However the team at Morgans seem to think investors should proceed with caution. 

The broker has reiterated its hold recommendation on the consumer discretionary stock, along with a slight price target decrease to $2.60 (previously $2.70). 

From yesterday's closing price, this indicates an upside of 10.6%. 

BBN's 1H26 pro-forma NPAT was up 4.1% yoy to $5.0m which was in the middle of guidance range ($4.5-$5.5m) driven by comps sales growth, gross margin expansion offset by higher costs. Nine stores have been refurbished to the new store design, and have performed strongly, sales up 25%, which is at the upper end of guidance range of 15-25%. FY26 NPAT guidance has been narrowed to $17.5-$19.5m (was $17-20m).

Seek shares have big upside

Morgans seems much more optimistic on Seek shares moving forward. 

The communications stock reported H1 FY26 results on Tuesday that included: 

• Sales revenue rose 21% to $647 million
• Net revenue up 12% to $601 million
• EBITDA increased 19% to $267 million
• Record fully franked interim dividend of 27 cents per share, up 13%. 

Its share price edged higher following this result, but Morgans believes there's more room to run for Seek shares. 

Seek shares are still down more than 30% year to date.

The broker upgraded its rating to a buy, and kept its price target at $27.50. 

From yesterday's closing price of $16.10, this indicates an upside of 70.8%. 

Whilst our DCF-derived price target remains unchanged at A$27.50 the recent sharp share price pullback now results in ~70% TSR upside.

We move to a Buy recommendation accordingly, though SEK has still many questions to answer on the AI threat.

The post Does this broker prefer Baby Bunting or Seek shares following earnings results? appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down 3.5% to $2.30. This morning, analysts at Morgans reaffirmed their hold rating on this baby products retailer's shares with a trimmed price target of $2.60. The broker said: "BBN's 1H26 pro-forma NPAT was up 4.1% yoy to $5.0m which was in the middle of guidance range ($4.5-$5.5m) driven by comps sales growth, gross margin expansion offset by higher costs. Nine stores have been refurbished to the new store design, and have performed strongly, sales up 25%, which is at the upper end of guidance range of 15-25%. FY26 NPAT guidance has been narrowed to $17.5-$19.5m (was $17-20m). We have made minor changes to forecasts. We have a $2.60 target price (was $2.70) Hold recommendation retained."

Capstone Copper Corp (ASX: CSC)

The Capstone Copper share price is down 18% to $12.78. This follows the release of the copper miner's guidance for 2026. Capstone Copper expects consolidated copper production of between 200,000 and 230,000 tonnes in 2026. This is broadly in line with 2025 levels. Management also advised that it expects consolidated C1 cash costs of US$2.45 to US$2.75 per payable pound of copper in 2026. This is an increase compared to 2025, primarily due to modest inflation and lower-grade ore at Mantos Blancos and Pinto Valley driven by mine sequencing.

Healius Ltd (ASX: HLS)

The Healius share price is down 11% to 72.7 cents. This morning, this healthcare company released its half-year results and reported a 3.8% increase in group revenue to $688.1 million and underlying EBIT of $7.9 million. The latter was up from a loss of $2.7 million a year ago. While management expects to achieve earnings in line with consensus estimates in FY 2026, it warned that its revenue and profitability will be skewed towards the second half. This is due to both the timing of cost savings and normal volume seasonality factors. The market appears sceptical that it will deliver on this guidance.

Suncorp Group Ltd (ASX: SUN)

The Suncorp share price is down 5% to $15.19. Investors have been selling this insurance giant's shares following the release of its half-year results. Suncorp reported a net profit after tax of $263 million, which is down heavily from $1.1 billion a year earlier. The company's CEO, Steve Johnston, said: "While Suncorp's 1H26 reported profits and shareholder returns have been challenged by an elevated level of natural hazard costs and lower investment returns over the half, our underlying business remains resilient as we continue to deliver on our strategic imperatives and drive good momentum leading into the second half of the financial year."

The post Why Baby Bunting, Capstone Copper, Healius, and Suncorp shares are falling today appeared first on The Motley Fool Australia.

In early afternoon trade, the Baby Bunting share price is up 10% to $2.42. It marks a welcome bounce for investors after the stock fell roughly 15% earlier this year.

Let's take a closer look at what impressed investors.

Record gross margin and solid sales growth

For the first half of FY26, Baby Bunting reported total sales of $271.4 million, up 6.7% on the prior corresponding period.

Comparable store sales increased 4.7%, above the company's earlier guidance range of 2% to 3%.

Gross margin was a standout metric, increasing 124 basis points to 41%, the highest level in the company's history. Management said this was driven by better supplier terms, growth in private label and exclusive products, and improved pricing discipline.

Gross profit increased 10% to $111.4 million.

Profit lifts, but costs still a focus

On a pro forma basis, net profit after tax (NPAT) came in at $5 million, up 4.1% on last year and in line with guidance.

Underlying NPAT, which strips out one-off items linked to store refurbishments and network changes, jumped 44% to $7.2 million.

However, cost of doing business rose to $96.8 million. This reflects investment in new stores, refurbishments, marketing, and general inflation pressures.

Management also confirmed no interim dividend will be paid as it focuses on funding growth.

Store upgrades delivering results

A key part of Baby Bunting's strategy is its 'Store of the Future' refurbishment program.

The company said refurbished stores delivered sales uplifts of around 25%, which is at the top end of its target range. In total, 6 refurbishments were completed in the first half, with more planned in the second half.

The company's online channel grew by 18% and now accounts for almost one quarter of overall sales.

Trading update and guidance

Importantly, momentum appears to have continued into the second half.

For the first 7 weeks of the second half, comparable sales are up 6.7%. That includes solid growth in both Australia and New Zealand.

Management maintained second-half pro forma NPAT guidance of $12.5 million to $14.5 million. Full-year pro forma NPAT guidance remains at $17.5 million to $19.5 million.

The company is also targeting full-year comparable sales growth of 5% to 7% and gross margin above 41%.

What's driving the share price?

Today's 10% jump reflects a positive market response to stronger sales momentum and record margins.

While the stock is still down for the year, these results show a business that is stabilising after a tougher retail period.

The focus now shifts to whether this improvement can be sustained. If comparable sales stay solid and margins remain above 41%, earnings growth in the second half could accelerate.

The post Why Baby Bunting shares are jumping 10% today appeared first on The Motley Fool Australia.

Three that it has given its verdict on are revealed below. Is it bullish, bearish, or something in between? Let's find out:

Baby Bunting Group Ltd (ASX: BBN)

Morgans has become more positive on this baby products retailer's shares following recent weakness.

And while it isn't quite ready to recommend Baby bunting as a buy, it has lifted its rating to hold (from trim) with a $2.70 price target. Commenting on the ASX share, the broker said:

The recent share price pullback has provided an opportunity to move our recommendation to HOLD (from TRIM), now offering ~6% TSR to our unchanged target price. Refurbished stores to date have performed above our expectations and management's target range (15-25%).

Up to October, the 3 refurbished stores have seen sales up 30% on the pcp. BBN has now completed 9 refurbishments, and we expect BBN to provide an update on performance at the 1H26 result. We see the risk/ reward now more balanced, and 14x FY27 PE as a fair valuation. We have made no changes to our forecasts or valuation. We have a $2.70 price target.

EBR Systems Inc (ASX: EBR)

An ASX share that Morgans is more positive on is EBR Systems. It is a medical device company focused on the treatment of cardiac rhythm disease through wireless cardiac pacing. It has a buy rating and $2.95 price target on its shares.

Morgans has been impressed with the company's commercial performance and highlights its sizeable total addressable market (TAM). It said:

4Q25 delivered a clear step-up in commercial execution, with case volumes doubling q/q and revenue materially ahead of expectations, confirming accelerating physician uptake during the Limited Market Release (LMR). Preliminary 4Q revenue of US$0.87-0.94m exceeded our estimate by c60%, with FY25 revenue of US$1.55-1.62m validating early pricing and demand assumptions.

We view clinical momentum with the WiSE-UP post-approval study and the TLC-AU feasibility study as supporting longer-term adoption and label expansion. Updated TAM of US$5.8bn (+60%) highlights a materially larger opportunity, underpinned by growth in leadless pacing and de novo CRT applications. We adjusted CY25-27 forecasts, with our DCF-based valuation increasing to A$2.95. BUY.

Treasury Wine Estates Ltd (ASX: TWE)

Finally, this wine giant's shares have fallen heavily over the past 12 months. Unfortunately, Morgans doesn't believe this necessarily means they are in the buy zone yet.

The broker has a hold rating and $5.25 price target on its shares. Commenting on the Penfolds owner, Morgans said:

As we feared, but even weaker than expected, TWE's trading update meant that consensus estimates were far too high. Its US performance was particularly disappointing given of all the capital spent in recent years. Gearing is now well above TWE's target range and will remain high for the next couple of years.

While we made large downgrades to our forecasts only two weeks ago following the goodwill write-down, TWE's new trading update has seen us make another round of material revisions. We stress that earnings uncertainty remains high. It will take time for new management to deliver more acceptable returns and for TWE to rebuild credibility with the market. We maintain a HOLD rating.

The post Buy, hold, sell: Morgans gives its verdict on 3 ASX shares appeared first on The Motley Fool Australia.

The team at Macquarie have done a deep dive into the sector, and believe they've come up with some solid picks which will generate impressive share price returns over the next 12 months.

Growth stories to dominate

Given the challenges the sector is facing, Macquarie has advised that rather than looking for value on an earnings basis, investors should look for a strong growth thematic from companies.

As they wrote in a note to clients:

In our view, investors looking to retain exposure to the consumer are best placed to focus on stocks with share growth stories and brand strength (i.e. quality) rather than value, given upcoming macro volatility into 2H26 (driven by potential interest rate increases).

In household retail, Macquarie's least preferred sector, share prices in general have been under pressure, particularly for Temple & Webster Ltd (ASX: TPW) which was sold off heavily after a trading update recently.

Another company which has seen its share price decline has been Nick Scali Ltd (ASX: NCK) however the Macquarie team are bullish on the outlook for Nick Scali shares, saying that while potential rate increases will be a negative, "Nick Scali foot traffic data tracking gives us confidence in the trading outlook''.

Macquarie has an outperform rating on Nick Scali shares and a price target of $28.20 versus the current price of $21.49, indicating potential upside of 31.2%.

Coffee a growth market

The Macquarie team is even more bullish on the prospects for Breville Group Ltd (ASX: BRG) shares, with a price target of $39.20 versus the current price of $29.64. If that were to be achieved it would be a 32.2% gain.

Macquarie says consumer data indicates that discretionary retail spend was strong heading into the sales events such as Black Friday, and they are confident that companies such as Breville represent value at current prices.

We remain confident in the health of discretionary consumption after Black November, and into Christmas, implying low macroeconomic risks to the small-cap discretionary retail stocks under our coverage. Our analysis … gives us confidence in the health of the underlying consumer for discretionary retailers, heading into 2H26. Given consumer discretionary share prices have all declined YTD FY26 so far (except Baby Bunting (ASX: BBN)), we think this represents a valuation opportunity.  

Macquarie said Breville was among its top picks in the discretionary sector, with structural growth in the coffee market and new products and market expansion to drive growth.

In the medium to long term, the expansion of coffee across all key geographic areas continues to be a driver for Breville. We expect revenue to be driven from coffee, as the market continues to go through coffee 'premiumisation' and structural growth driven by higher penetration across North America, Europe and APAC.

The post Macquarie says these two ASX retail stocks are good buying at current levels appeared first on The Motley Fool Australia.

Three ASX shares that it has given its verdict on are listed below. Here's what the broker is saying about them:

Baby Bunting Group Ltd (ASX: BBN)

Morgans has been looking at this baby products retailer's trading update, which was in line with expectations.

As a result, it feels that its shares remain fully priced at current levels and has retained its trim rating (one notch above sell and one notch below hold) with a $2.70 price target. It explains:

BBN has provided a trading update which was broadly in line with expectations, with comp sales YTD up 2.2%. FY26 guidance was reiterated for pro forma NPAT of $17-20m. Earnings will be skewed to the 2H driven by stronger sales growth post store refurbishments and incremental margin improvement. The three newly refurbished stores continue to trade well, with an average 30% sales uplift YTD, in line with the 28% reported at the time of the FY result.

This is above the target range of 15-25%, however we still think it is early days. Whilst we acknowledge the significant leverage if the business can return to 10% EBITDA margins, we believe this relies on solid execution, and think this is reflected in current valuation. Given the share price strength, we retain our TRIM recommendation.

Rio Tinto Ltd (ASX: RIO)

This mining giant delivered a solid quarterly update this week. However, it notes that a very strong finish to the year will be needed to achieve its guidance. In light of this and its stretched valuation, the broker has downgraded Rio Tinto's shares to a trim rating with a $117.00 price target. It explains:

Operational delivery was again solid, but RIO is relying on a stellar 4Q just to achieve the low end of Pilbara shipments guidance. Copper again was the standout, driving group momentum and sentiment. Valuation starting to stretch moving beyond a positive TSR, prompting TRIM rating.

SRG Global Ltd (ASX: SRG)

Morgans is a fan of this engineering services company's acquisition of Total Ams and believes it will be significantly accretive to earnings. It also likes that it will improve diversification and provide exposure to the government's significant maritime defence spend. In response, Morgans has put an accumulate rating and $3.00 price target on its shares. It said:

The acquisition of TAMS on a cheap multiple is materially EPS accretive and is on strategy, improving diversification and increasing exposure to the government's significant maritime defence spend over the next decade. In our view, the added scale, diversity and strong forecast EPS growth over FY26 (+25%) and FY27 (+16%), should ensure the stock continues to re-rate. Moreover, the balance sheet remains conservative meaning SRG can continue to supplement organic growth with further acquisitions. Our target price rises to $3.00 from $2.10.

The post Buy, hold, sell: Baby Bunting, Rio Tinto, and SRG Global appeared first on The Motley Fool Australia.

According to a fresh note from Macquarie's equity research team, Baby Bunting's growth story is gaining momentum, powered by the company's "Store of Future" strategy, but the analysts are not yet getting carried away.

What Macquarie is seeing

Macquarie says Baby Bunting's "Store of the Future" strategy (which is essentially a store refurbishment rollout) is showing promising early signs. For example, refurbished stores are delivering an average 30% uplift in sales, up from 28% in August.

This (along with solid NPAT guidance) has prompted Macquarie to lift its 12-month share price target to $3.15 (from $2.50), which is a tidy upgrade, but implies only a 5.7% total shareholder return from the current $3.00 share price.

The recommendation? Still neutral. Put simply, Macquarie likes the direction, but its valuation is close to the current share price (implying minimal upside) and needs to see more execution and proof that this growth spurt can keep going.

Now what?

The big takeaway is this: Baby Bunting's comeback is off to a strong start. The store strategy is working, customer traffic is improving, and margins are trending higher. But after an 80% rally, it's worth proceeding with caution.

Macquarie's $3.15 target implies that, at least for now, the stock is fairly priced for the progress it's made. Future upside likely depends on the company proving that its "Store of the Future" rollout can consistently deliver growth without compromising profits.

For investors, the story has shifted from survival mode to execution. If Baby Bunting can keep those refurbished stores buzzing, the next leg of growth could be a happy surprise.

It's also worth noting that, despite the recent run, Baby Bunting shares are still down 40% over the last five years. It's easy to get caught up in all the recency bias, but if the fundamentals keep improving, then the share price could rise much higher.

Until then, Macquarie's neutral rating is essentially a "wait and see."

Foolish Bottomline

After an 80% rally, Baby Bunting looks like a stock that's finally ready to put on its big boy pants. I think it's a long road ahead with plenty of upside potential, but only if the fundamentals continue to improve. Like all baby steps, however, falls should be expected. The market is always looking ahead, and likewise, investors should also be thinking of what comes next. Baby Bunting may need a few more steps before it starts running again.

The post After rallying 80% this year, what's Macquarie's price target on Baby Bunting? appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

Aussie Broadband Ltd (ASX: ABB)

The Aussie Broadband share price is down 1.5% to $5.70. This follows the release of a trading update ahead of its annual general meeting. The company's CEO, Brian Maher, said: "FY26 is set to be another year of growth for Aussie Broadband and we anticipate growth of between 14 and 21% in underlying EBITDA to a range of $157 to $167 million." It seems that the market was expecting even stronger growth from the telco in FY 2026.

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down 5% to $3.00. This also appears to have been driven by the release of a trading update ahead of the baby products retailer's annual general meeting. Baby Bunting revealed that total sales are up 3.5% year to date through to 12 October. This has been achieved with an improved gross profit margin of 40.6%. Looking ahead, a net profit after tax in the range of $17 million to $20 million is expected. This is up from $12.1 million in FY 2025. However, it is worth noting that this earnings guidance is heavily weighted to the second half. Management expects a net profit of just $4.5 million to $5.5 million for the first half.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is down almost 4% to $5.81. This may have been caused by profit taking from some investors after strong gains in recent weeks. For example, the counter drone technology company's shares are up over 75% since this time last month despite today's pullback. And looking further back, the high-flying stock is up an incredible 680% year to date.

Web Travel Group Ltd (ASX: WEB)

The Web Travel share price is down almost 4% to $4.22. This may have been driven by a broker note out of Morgan Stanley this morning. According to the note, the broker has retained its underweight rating on the travel company's shares with a reduced price target of $4.00 (from $4.25). This follows the recent release of a trading update which fell short of the broker's expectations.

The post Why Aussie Broadband, Baby Bunting, DroneShield, and Web Travel shares are falling today appeared first on The Motley Fool Australia.

Currently trading at $2.96, Baby Bunting says it's the leading specialist baby retailer in Australia and New Zealand with 75 stores. The company says that the $6 billion market it operates in is growing and resilient.

After a challenging period, with lower margins amid strong competition, the company seems to have turned a corner.

The company reported good numbers in FY25, with sales growth of 4.7% to $521.9 million, a 340 basis point (3.40%) rise in the gross profit margin to 40.2%, underlying net profit growth of 228% to $12.1 million, and statutory net profit growth of 462% to $9.5 million.

The balance sheet has also improved, with net debt reaching $4.6 million at June 2025, up from $13 million at June 2024.

For me, FY26 and beyond look very promising for the ASX small-cap stock.

Strong outlook for the ASX small-cap stock

The 2026 financial year has started strongly – in the first six weeks, total sales grew 4.8%, with Australian comparable sales growth of 3.7% and New Zealand comparable sales growth of 13.9%. That alone suggests another good year, combined with the company's gross profit forecast of 41% in FY26 (up from 40.2% in FY25).

In FY26, the group plans to open five new large format stores, three new small format pilot stores in the first half, and a further two to three planned for the fourth quarter of FY26, depending on the success of the pilot stores. It has a long-term plan of around 80 additional stores, with 40 large format stores and up to 40 small format stores. The greater scale could help with improving profit margins.

FY26 underlying net profit is expected by the ASX small-cap stock to be between $17 million to $20 million, implying at least 40% growth year over year.

The forecast on Commsec suggests the earnings per share (EPS) could reach 13.1 cents in FY26, 18 cents in FY27, and 22.4 cents in FY28. This means it's trading at 22x FY26's estimated earnings and 13x FY28's estimated earnings.

The post Why I think this ASX small-cap stock is a bargain at $2.96 appeared first on The Motley Fool Australia.

It was a spectacular day for investors the with the company's share price rising by 40% from Thursday's close to end the week at $2.60 per share.

On Monday, Baby Bunting shares took a breather with a pull-back sending the share price to $2.42 at the close of business.

Nevertheless, shares in the baby and maternity goods retailer are up by 31% since reporting its results.

But where to from here?

Renowned investment firm Macquarie Group Ltd (ASX: MQG) has crunched the numbers and delivered its verdict.

Before diving into the broker's viewpoint, let's first recap what the company reported.

Record sales and surging profit

Total sales hit a new record of $521.9 million after rising by 4.7% year-on-year.

Management noted that this outcome was supported by comparable store sales growth of 4.2%.

Total active customers grew by 4.5% from the previous year to reach 828,000, with new customer acquisitions also jumping by 6.2%.

Baby Bunting's gross margin of 40.2% increased by 340 basis points to surpass a previously reported target of 40%.

In turn, net profit after tax (NPAT) on a pro-forma basis rocketed by 228% to come in at $12.1 million.

Net debt of $4.6 million at the end of June also improved substantially – down from $13 million at the same time last year.

Growth strategy gains momentum

Meanwhile, the company's Store of the Future refurbishment program generated a 28% jump in sales across three stores opened in FY25.

This recently launched growth initiative features modernised store layouts to enhance customer experience and drive sales.

Baby Bunting is targeting up to 12 Store of the Future refurbishments in FY26.

It also plans to open five new large format stores and three small format pilot stores in the first half of the fiscal year.

Macquarie weighs in

Analysts at Macquarie group have now chimed in with their views following the surge in Baby Bunting shares.

And the broker appears to be taking a cautious tone.

It noted that Baby Bunting's growth strategy is showing early signs of traction with 28% sales growth across the first three refurbished stores.

That said, Macquarie pointed to higher promotional activity and the short timeframe of less than four months since these stores first opened.

As such, the broker is keen more information from the refurbishment program in FY26 before becoming materially positive on Baby Bunting shares.

Macquarie is projecting year-on-year comparable store growth of 4.3%, which comes in at the lower end of management's guidance.

It believes that the significant number of refurbishments in FY26 could impact comparable store growth targets.

Similarly, its estimate for FY26 NPAT is 3.5% lower than the bottom end of the company's guidance, which ranges between $17 million and $20 million.

In turn, Macquarie has placed a neutral rating on Baby Bunting shares with a 12-month target price of $2.50 per share.

This implies a modest 3.3% upside from Monday's closing price.

However, the broker noted that improved consumer demand stemming from interest rate cuts could help the company meet its targets.

It also sees continuing sales growth in FY26 as a potential catalyst for Baby Bunting shares.

The post Are Baby Bunting shares a buy after surging 31% on FY25 results? appeared first on The Motley Fool Australia.

Four ASX shares that are rising more than most today are listed below. Here's why they are ending the week with a bang:

Ampol Ltd (ASX: ALD)

The Ampol share price is up 8% to $29.15. This may have been driven by a note out of Ord Minnett this morning. In response to news that the fuel retailer is looking to acquire EG Australia for $1.1 billion, its analysts have retained their buy rating with an improved price target of $36.60. It believes the acquisition would be a smart move and boost its retail earnings.

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is up 29% to $2.38. Investors have been buying this baby products retailer's shares following the release of its full year results. Baby Bunting reported a 4.7% increase in total sales to a record of $521.9 million. Things were even better on the bottom line, with pro forma net profit after tax rocketing 228% to $12.1 million. This was at the upper end of its guidance range. Management is guiding to further strong growth in FY 2026, with pro forma net profit after expected to be $17 million to $20 million.

Origin Energy Ltd (ASX: ORG)

The Origin Energy share price is up 3% to $12.94. This morning, the team at Citi responded to the energy company's full year results by retaining its buy rating and $13.00 price target on its shares. It was relatively pleased with its results and believes they were largely in line with expectations. Macquarie is less positive and has put a neutral rating and $11.34 price target on its shares. It said: "Maintain Neutral. ORG looks to be pricing much of the Kraken IPO into the share price already. Core assets like EM market and APLNG valuation outlook appears flat."

South32 Ltd (ASX: S32)

The South32 share price is up 2% to $2.96. This morning, Macquarie retained its outperform rating on this mining giant's shares with a trimmed price target of $3.20. This follows news that its Mozal aluminium operation is set to go into care and maintenance next year after failing to secure a suitable energy supply.

The post Why Ampol, Baby Bunting, Origin Energy, and South32 shares are racing higher appeared first on The Motley Fool Australia.

At the time of writing, shares in the ASX retail stock are trading at $2.43 apiece – up by 31% from yesterday's closing price of $1.85.

For context, the All Ordinaries Index (ASX: XAO) is trading flat at the same time.

This price surge has now seen Baby Bunting shares deliver a 67% return for investors over the last twelve months.

Without further ado, let's find out how the year unfolded for the company.

FY25 results in focus

Baby Bunting reported a series of notable outcomes in FY25.

Sales of $521.9 million hit a new record after rising by 4.7% from the previous year, supported by comparable store sales growth of 4.2%.

Management noted that sales were strong across all key categories.

Sales in soft goods – such as clothes and toys – were the standout as the company's Store of the Future rollout continued to build momentum. Here, the group reported a 24% rise in transactions and a 6% increase in basket sizes.

This recently launched growth initiative features updated store layouts. It is designed to enhance customer experience and boost sales.

All up, the Store of the Future refurbishment program delivered a 28% jump in sales across three stores opened in FY25.

Elsewhere, new customer acquisitions grew by 6.2%. Management attributed this performance to the group's refreshed value proposition and marketing approach.

Total active customers ended FY25 at 828,000 – up by 4.5% on last year.

Meanwhile, the company's gross margin of 40.2% increased by 340 basis points year-on-year, exceeding a previously reported target of 40%.

In turn, net profit after tax (NPAT) on a pro-forma basis clocked in at $12.1 million. This robust performance equates to a 228% surge from twelve months prior.

Baby Bunting also reported a strong improvement to its bottom line.

Net debt at the end of June came in at $4.6 million, down from $13 million at the same time last year.

However, the board of directors opted not to pay a dividend for FY25.

Instead, the ASX retail stock intends to use its improved balance sheet to support its ongoing growth strategy.

Baby Bunting's CEO, Mark Teperson, said:

We're pleased to deliver a strong FY25 result – with our profit landing at the top end of our guidance range, and a record sales figure – validating the effectiveness of our strategy. Further, in a challenged consumer environment where gross margins have been under pressure, we have delivered 340 bps of improvement, reflecting our disciplined execution. Gross margin of 40.2% was a record for the business.

What next for this ASX retail stock?

Looking ahead, Baby Bunting is targeting up to 12 Store of the Future refurbishments in FY26.

It also plans to open five new large format stores and three small format pilot stores in the first half of FY26.

A further two or three small format stores could be on the cards in the fourth quarter of the fiscal year, should the pilot stores prove to be a success.

All up, Baby Bunting is guiding for pro-forma NPAT to range between $17 million and $20 million in FY26.

This outlook assumes store sales growth of between 4% and 6% for the year, and a gross margin of 41%.

Capital expenditure of between $30 and $35 million is expected to be fully funded through operating cash flow.

The post Guess which ASX retail stock is rocketing 31% on results day? appeared first on The Motley Fool Australia.

Three broker buy ratings that you might want to know more about are summarised below. Here's why brokers think these ASX shares are in the buy zone right now:

Baby Bunting Group Ltd (ASX: BBN)

According to a note out of Ord Minnett, its analysts have upgraded this baby products retailer's shares to a buy rating with a $2.15 price target. It made the move partly on valuation grounds following a period of share price weakness. In addition, Ord Minnett was pleased with Baby Bunting's trading update this week and highlights its strong sales performance and margin improvements. It was also happy to see that management narrowed its profit guidance range upwards for FY 2025 and expects it to build on this next year with further strong profit growth. The Baby Bunting share price is trading at $1.73 on Friday.

Judo Capital Holdings Ltd (ASX: JDO)

A note out of Morgans reveals that its analysts have retained their add rating on this small business lender's shares with a reduced price target of $1.75. This follows the release of a trading update this week which saw Judo Capital downgrade its guidance. While Morgans was disappointed with the update and has downgraded its earnings estimates accordingly, it remains positive. Particularly given how management continues to forecast strong earnings growth in FY 2026. Morgans believes this trend will continue in FY 2027, with further strong growth. As a result, it feels that its shares are good value following a sharp pullback in its share price this week. The Judo Capital share price is fetching $1.45 at the time of writing.

Woolworths Group Ltd (ASX: WOW)

Analysts at Goldman Sachs have retained their buy rating on this supermarket giant's shares with an improved price target of $36.50. According to the note, the broker was pleased with Woolworths' performance during the third quarter. It highlights that Woolworths' sales were largely in line with estimates. Total Australia Food sales were up 3.6%, which was ahead of industry growth rates for the period. Outside this, the broker expects a strong recovery in both sales and earnings in FY 2026. It is forecasting group sales growth of 4% and EBIT growth of 20% for the next financial year. In light of this, it thinks the company's shares are good value at current levels. The Woolworths share price is trading at $32.73 on Friday afternoon.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

Both companies released their half-year results this morning for the six months ending 31 December (1H FY 2025).

Here's what's happening.

Profits up, debts down

The first ASX All Ords share reporting a big uptick in six-month profits is Baby Bunting Group Ltd (ASX: BBN).

Shares in the infant specialty retailer have yet to get a lift from those results, with the Baby Bunting share price down 0.5% in early trade today at $1.83 a share.

Baby Bunting reported a 37% year on year increase in pro forma net profit after tax (NPAT) of $4.8 million.

Total sales for the half came in at $254.4 million, up 2.4% from 1H FY 2024, with comparable store sales growth increasing by 2.2%.

There was a big improvement in margins as well, with a gross margin of 39.8%, up 2.60%. And management noted the company is on track to deliver its FY 2025 gross margin target of 40%.

On the balance sheet, net debt fell to $9.1 million from the $13.0 million reported in June 2024.

The half-year also saw the ASX All Ords share open two new stores in Australia, with Baby Bunting now having a total of 75 stores.

Looking ahead to what could impact Baby Bunting shares, the company reiterated its FY 2025 guidance of $9.5 million to $12.5 million pro forma NPAT.

Commenting on the half-year performance, Baby Bunting CEO Mark Teperson said:

Our focus on driving sales through range innovation and new customer acquisition is delivering results. Newness in our ranges continues to resonate, with new customer acquisition up 12% on the prior period.

Which brings us to…

Profits surge for ASX All Ords share

The second ASX All Ords share achieving a big lift in half-year profits is Monadelphous Group Ltd (ASX: MND).

Investors have responded by sending shares in the engineering and mining services company up 0.8% in morning trade at $15.71 a share.

Monadelphous reported a 4.2% year on year increase in revenue for the six months to $1.05 billion. And earnings before interest, taxes, depreciation and amortisation (EBITDA) leapt 30.2% from 1H FY 2024 to $79.8 million.

As for that surging profit, Monadelphous' NPAT of $42.5 million was up 41.3%.

Over the half-year, the ASX All Ords share secured approximately $1.7 billion of new contracts and extensions across a range of sectors, including energy, iron ore, other minerals, and renewable energy.

On the balance sheet, the company ended the half with a cash balance of $272.5 million.

Commenting on the results, Monadelphous managing director Zoran Bebic said:

Resources and energy demand is expected to remain strong over the long-term, underpinned by sustained economic growth and increasing investment in decarbonisation activities. Significant investment in the renewable energy sector is also forecast to support the energy transition.

The post 2 ASX All Ords shares that just reported 40%+ profit jumps appeared first on The Motley Fool Australia.

Four ASX shares that are rising more than most today are listed below. Here's why they are climbing:

Arafura Rare Earths Ltd (ASX: ARU)

The Arafura Rare Earths share price is up 20% to 13.75 cents. This follows news that the rare earths developer has signed a binding term sheet with the National Reconstruction Fund Corporation (NRFC) for a $200 million investment commitment through the issue of unsecured convertible notes. The NRFC invests to diversify and transform Australia's industry and economy. It has $15 billion to invest using direct loans, equity investments and loan guarantees. The release notes that the funding will be used to support the development of the Nolans Project in the Northern Territory.

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is up 11% to $1.75. Investors have been buying the baby products retailer's shares after it released a first half update. Baby Bunting reported comparable store sales growth of 2.2% for the half. This was driven largely by second quarter comparable store sales growth of 4.5%. The retailer also revealed that it expects to report a first half gross profit margin of 39.8%, up 260 basis points on the prior corresponding period. Combined, a pro forma net profit after tax of $4.8 million is expected for the first half. This represents a 37% increase on the same period last year. Looking ahead, management has reaffirmed its guidance. It is forecasting FY 2025 pro forma net profit after tax in the range of $9.5 million to $12.5 million.

Guzman Y Gomez Ltd (ASX: GYG)

The Guzman Y Gomez share price is up 6% to $40.70. This appears to have been driven by a broker note out of UBS. This morning, the broker has taken its sell rating off the quick service restaurant operator's shares, upgraded its rating to neutral, and lifted its price target to $40.00.

PWR Holdings Ltd (ASX: PWH)

The PWR Holdings share price is up 3% to $7.85. Yesterday, this advanced cooling products and solutions company revealed that its North American subsidiary, C&R Racing, has secured a US$5.5million (~A$8.9 million) order to supply advanced cooling solutions for a US government project. Goldman Sachs was pleased. It thinks that this announcement will be "the first of a number of long-term opportunities in the A&D division with the emerging eVTOL space providing a material opportunity as it continues to progress towards regulatory approval and production capacity is built out to meet customer demand." Goldman has a buy rating and $9.10 price target on its shares.

The post Why Arafura, Baby Bunting, Guzman y Gomez, and PWR shares are storming higher appeared first on The Motley Fool Australia.

In morning trade, the ASX retail stock is up 11% to $1.75.

Why is this ASX retail stock jumping?

Investors have been buying the baby products retailer's shares today after responding positively to the release of a first-half update.

According to the release, Baby Bunting returned to form during the first half with comparable store sales growth of 2.2%. This was driven largely by a strong performance in the second quarter, which saw comparable store sales increase 4.5% over the prior corresponding period.

Another positive is that the ASX retail stock expects to report a first half gross profit margin of 39.8%. This up 260 basis points on the prior corresponding period and means that Baby Bunting is on track to deliver on its FY 2025 margin target of 40%.

The sum of the above is that the company expects to post a pro forma net profit after tax of $4.8 million for the first half. This represents a 37% increase on the $3.5 million recorded for the same period last year.

Commenting on the half, the ASX retail stock's CEO, Mark Teperson, said:

We are pleased to share this update today which demonstrates our successful progress in executing our strategy of growing market share, EBITDA and return on capital.

The November and December trading periods were particularly strong, with well-executed campaigns resonating with our consumers, driving comparable store sales growth of 4.5% in Q2.

At the same time, our focus on renegotiating supplier terms, simplifying our price architecture and our exclusive brands and private label works delivered significant gross margin expansion, finishing at 39.8% for 1H.

Outlook

Baby Bunting has reaffirmed its guidance for the full year.

It is forecasting FY 2025 pro forma net profit after tax in the range of $9.5 million to $12.5 million.

This is based on the expectation that comparable store sales growth will be in the range of 0% to 3%, its gross margin will be 40%, and its cost of doing business will increase.

The latter reflects new and annualising store costs, wage inflation of 3.75%, and additional roles and marketing to support strategy execution.

When speaking about the company's outlook, Teperson revealed that the second half has started positively. He said:

Pleasingly, this momentum has continued into the first weeks of 2H, with strong customer engagement and positive feedback driven by our strategic range innovation across our key categories.

Our store refurbishment program is on track, and we look forward to providing a further update in February. This result reinforces our confidence in the transformative opportunity of our strategic roadmap as we continue to navigate the evolving retail landscape with discipline and focus.

The post Guess which ASX retail stock is jumping 11% today appeared first on The Motley Fool Australia.

Four ASX shares that are rising more than most today are listed below. Here's why they are climbing:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is up 2% to $1.82. Investors have been buying this baby products retailer's shares following the release of a first quarter trading update. Baby Bunting revealed that its gross profit margin increased to 40.3% for the quarter, which is up 240 basis points on the prior corresponding period. This means that it is on track to deliver on its FY 2025 margin target. In light of this, management has maintained its FY 2025 earnings guidance. It expects pro forma net profit after tax to be in the range of $9.5 million to $12.5 million.

Hub24 Ltd (ASX: HUB)

The Hub24 share price is up 3% to a record high of $65.26. This follows the release of the investment platform provider's first quarter update. For the three months, Hub24 reported record quarterly platform net inflows of $4 billion. This took its Platform FUA to $91.6 billion at the end of September, which represents growth of 8% over the previous quarter and 41% on the prior corresponding period. This reflects its record quarterly net inflows of $4 billion and positive market movements of $3.1 billion. There were no large migrations during the quarter.

Lotus Resources Ltd (ASX: LOT)

The Lotus Resources share price is up 5.5% to 28.5 cents. This may have been driven by a broker note out of Bell Potter this morning. According to the note, the broker has retained its speculative buy rating and 50 cents price target on the uranium developer's shares. It said: "We make no changes to our valuation of $0.50/sh in this note and maintain a Speculative Buy recommendation. We see positive catalysts at Kayelekera Mine primarily being production offtake, which in turn supports project financing. LOT is highly leveraged to the uranium price, which we continue to remain constructive on over the short to medium term."

Wildcat Resources Ltd (ASX: WC8)

The Wildcat Resources share price is up 4% to 37.5 cents. Investors have been buying this lithium explorer's shares following the release of its quarterly update. The company had a busy quarter, ticking a number of items off its extensive to do list. This includes identifying new high-grade zones at its Chewy North and Han pegmatite bodies within Tabba Tabba Lithium Project in Western Australia. In addition, it notes that much of the long-lead-time study work to progress Tabba Tabba, such as geotechnical drilling, water bore drilling, and groundwater tests, is now complete.

The post Why Baby Bunting, Hub24, Lotus Resources, and Wildcat shares are storming higher today appeared first on The Motley Fool Australia.

Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down almost 8% to $1.53. This appears to have been driven by a broker note out of Morgans this morning. According to the note, the broker has downgraded the baby products retailer's shares to a hold rating with a trimmed price target of $1.70. It said: "BBN's FY24 earnings were in line with recent guidance. Earnings came under real pressure in FY24. BBN expects to return to positive growth in sales and margins in FY25, but with an FY1 PE of 19.5x and with consensus NPAT sitting towards the top of the guidance range, we adjust to a HOLD rating."

Corporate Travel Management Ltd (ASX: CTD)

The Corporate Travel Management share price is down 6.5% to $11.70. Although the corporate travel specialist reported strong profit growth in FY 2024, it fell short of its guidance. Corporate Travel Management posted a 22% increase in underlying net profit after tax to $113.3 million. This compares to its guidance of $125 million to $140 million. Management also warned that is facing significant headwinds in FY 2025. This includes a forecast 18% decline in European revenue due to the completion of non-recurring projects.

Lycopodium Ltd (ASX: LYL)

The Lycopodium share price is down 12% to $12.29. This has been driven by the release of the engineering company's full year results. Lycopodium reported revenue of $348.9 million and net profit after tax of $50.7 million, which were up modestly year on year. However, one thing falling was its cash balance, which reduced by 18% to $67.6 million. This may have spooked investors and overshadowed management positive outlook. It said: "The Company expects to maintain its strong financial performance in FY2025."

Santos Ltd (ASX: STO)

The Santos share price is down 5.5% to $7.39. Investors have been selling this energy producer's shares following the announcement of its half year results. Santos reported a 9% decline in sales revenue to US$2.7 billion and an 18% reduction in underlying profit to US$654 million. This was driven by lower volumes, lower realised LNG prices, higher tax expense, and a higher effective tax rate. Management has held firm with its production guidance for the full year.

The post Why Baby Bunting, Corporate Travel, Lycopodium, and Santos shares are falling today appeared first on The Motley Fool Australia.

That's because the Baby Bunting share price jumped almost 17% to $1.78 in morning trade.

This has been driven by the release of the baby products retailer's results for FY 2024 and guidance for the year ahead.

Baby Bunting share price jumps on results release

• Pro forma sales down 3.4% to $498.4 million
• Gross margin narrowed 56 basis points to 36.8%
• Net profit after tax down 74.7% to $3.7 million
• No final dividend for FY 2024

What happened during the year?

As you can see from the summary above, it was not an easy 12 months for Baby Bunting.

Its total sales were down 3.4% year on year to $498.4 million and its comparable store sales were down 6.3%. Management advised that this reflects the challenging trading conditions and cost of living pressures faced by consumers.

The good news is that the company has seen an improvement in its sales performance trajectory since May as it implements strategic initiatives that are designed to improve both top line sales and profitability.

Baby Bunting's gross profit margin was under pressure in FY 2024. It was down 56 basis points to 36.8%.

Management advised that this reflects increased margin pressure in key hard good categories, which is being addressed through a number of initiatives. This includes the simplification of pricing architecture, renegotiation of trading terms with suppliers, and elevating exclusive brand partnerships in its range offer.

This ultimately led to the company's pro forma net profit after tax falling almost 75% to $3.7 million. In light of this, the Baby Bunting board decided that no final dividend will be paid.

Management commentary

Baby Bunting's CEO, Mark Teperson, revealed that he has been pleased with the early results of its strategic growth initiatives. He said:

While it is still early days, it is pleasing to see the implementation of the strategic growth initiatives that we announced as part of our Investor Day in June 2024 starting to deliver positive momentum in our trading and financial performance.

Of note has been the improvement in trajectory of our comparable store sales since May, reflecting the change in our go-to-market strategy and the 180-basis points improvement in our Gross Profit Margin achieved in July 2024 following simplification of elements of our pricing structure. We remain focused on continuing to implement our strategy and maintaining the positive momentum achieved over the past three months.

Outlook

Potentially lifting the Baby Bunting share price today is the company's outlook statement.

Management is expecting a big rebound in its profits in FY 2025. It is guiding to pro forma net profit after tax in the range of $9.5 million to $12.5 million.

This is based on the expectation of comparable store sales growth of 0% to 3% and a full year gross profit margin of 40%.

The post Why is the Baby Bunting share price jumping 17% today? appeared first on The Motley Fool Australia.